A guide to third sector trading - WCVA

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It’s an idea, but is it business? A guide to third sector trading 1: Getting started 2: First steps 3: Business planning 4: Legal and governance 5: Funding and resourcing 6: Financial controls 7: Managing growth 8: Management and governance 9: Social enterprise 10: Sources of support 8.2 Managing for sustainability As well as attempting to define the term ‘sustainability’, section 5.2 looks in detail at the financial and funding measures a social enterprise organisation can take to improve its sustainability. These are important, but they are only part of the task of creating a robust well-managed enterprise with the potential for development in the long term. This section describes how enterprises can achieve a business culture and structure to underpin this improved financial security. Recognising sustainability A continuum of sustainability: Community-based social enterprise organisations range from completely sustainable and perhaps financially viable – as in the case of the landmark Galerie project in Caernarfon which is supported by the income from property assets – to largely unsustainable. Many are working actively to generate income to reduce their dependency on outside support, or to expand what they do. Some of these will eventually be able to survive even if grants are cut drastically, and some will be able to struggle on through limited periods of grant drought ready for revival later. Others will simply be less beholden to grant funders than they once were. How sustainable? All that is successful third sector trading – though there will continue to be debates about how the sustainability of the resulting organisations can or should be measured. • There are some who think a social enterprise which survives on a mix of grants and earned income for 20 years, but closes when its hotel business goes wrong – as happened to Amman Valley Enterprise in 2009 – is a failure. To others this is a stunning success to be emulated throughout the third sector, with the lessons of the experience shared as widely as possible. • The lack of clarity among those promoting and supporting social enterprise can be bitterly frustrating for practitioners. But fortunately groups which achieve sustainability do not have too much difficulty recognising how it changes them. 212
It’s an idea, but is it business? A guide to third sector trading 1: Getting started 2: First steps 3: Business planning 4: Legal and governance 5: Funding and resourcing 6: Financial controls 7: Managing growth 8: Management and governance 9: Social enterprise 10: Sources of support Steps to a sustainable organisation Some essential practical steps: The action you need to take to build a sustainable enterprise inevitably vary from one type of organisation to another. The description that follows is designed for a dynamic community regeneration charity which is making a big switch towards trading activities to reduce its grant dependency. The suggestions will not suit everyone, but many elements of this programme will apply to other forms of third sector trading too. (And, yes, many non-trading voluntary organisations are already familiar with these steps, but not usually as part of a planned and systematic approach.) There are five key areas where you can prepare the way: • creating a stable core organisation • fostering an enterprising culture in your organisation • being prepared for the negative consequences of new social enterprise development • securing the support you need to help you out when things go wrong Creating a stable core: This requires • diversified funding sources (see section 5.2) • diversified project activities • grant funding with realistic management fees to cover overheads • cost-centred financial management – ie each activity is accounted for separately so that you can see how well it is doing (see section 6.2 and Appendix 3) • spending economies and waste control • more flexible working practices; possible changes to staff pay and conditions (see section 8.3) • sustainable management structures created by training, mentoring and sharing skills • appropriate financial reporting and monitoring (see 6.4) • the contribution, where appropriate, of well-managed volunteers to augment the work of paid staff. • setting targets and measuring progress. 213
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A guide to third sector trading - WCVA

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